The Shenzhen Shihui Lingqian Gongcheng Charity Foundation (深圳市施惠零铅工程慈善基金会) had its registration repealed due to an apparently illegal misappropriation of 3.03 million Yuan. Barely four days later, seven foundations in Henan had their registrations repealed. This punishment is the harshest possible and means these foundations must fold. The author asks if these developments signify a move towards stricter controls on foundations’ management.
These are not isolated incidents. The Shenzhen government has been carrying out random inspections on social organisations this November and will continue into December in preparation for stricter regulations to be enforced from January 2015. A Henan official said that the cancelling of the seven foundations’ registrations does not mean that access to registration is becoming more difficult, only that social organisations must ensure their funds, locations and staff meet stated requirements, and that they must cooperate with the authorities on annual inspections.
In terms of what happens to a foundation’s assets after registration has been repealed, the Foundation Management Regulations are clear-cut on the issue. If the foundation voluntarily cancels its registration, it can spend the surplus on public welfare projects. However, if a foundation’s registration is repealed by the government, its assets will be confiscated.